House of Representatives

Explanatory Memorandum

(Circulated by authority of the Assistant Treasurer and Minister for Financial Services, the Hon Stephen Jones MP)

Chapter 6: Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Treasury Laws Amendment (Tax Accountability and Fairness) Bill 2023

Schedule 1 – PwC response - Promoter penalty law reform

Overview

6.1 Schedule 1 to the Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

6.2 Schedule 1 to the Bill amends the TAA 1953 to penalise entities who promote tax schemes to clients in order to protect those clients from the risk of being liable for tax shortfall, penalties and interest from entering into such schemes.

6.3 The amendments aim to deter tax practitioners from harmful promoter behaviour and safeguard their clients from those additional liabilities.

Increase to penalty amounts

6.4 The amendments increase the maximum civil penalties that may be imposed on an entity for breaching the promoter penalty laws. For entities that are not a body corporate or SGE, the maximum penalty applicable under the promoter penalty laws is the greater of 5,000 penalty units or three times the benefits received or receivable, directly or indirectly, by the entity or its associates in respect of the relevant scheme.

6.5 For a bodies corporate and SGEs, the maximum penalty is the greatest of the amounts listed above, or 10% of their aggregated turnover for the most recent income year ending before the relevant breach occurred, or began occurring, capped at 2.5 million penalty units.

6.6 These changes align the maximum civil penalties for breaching the promoter penalty laws with penalties in the Corporations Act 2001 and ensure that civil penalty frameworks are interpreted and operate consistently across Commonwealth legislation.

Extension to partnerships and trusts

6.7 Where an individual contravenes the promoter penalty laws while acting in their capacity as a partner in a partnership or as a trustee of a trust, the other partners in the partnership or trustees of the trust will be jointly and severally liable for the penalty imposed for the contravention.

6.8 The amendments ensure that liability for a penalty imposed by the Court is appropriately targeted. Joint and several liability is an existing principle under Australian partnership laws which ensure that a partner cannot avoid liability for the actions of other partners with whom they are in partnership. Similarly, the amendments provide that co-trustees of a trust will also be joint and severally liable for such civil penalty.

Human rights implications

6.9 Schedule 1 to the Bill engages the right to a fair trial, as well as the presumption of innocence in Articles 14 of the ICCPR. Article 14(2) of the ICCPR recognises that all people have the right to be presumed innocent until proven guilty according to the law. Articles 14 apply only in relation to the rights of natural persons, not legal persons, such as companies. The maximum penalties increased by the amendments relate to natural persons, including individual partners in a partnership that is an SGE and individual trustees of a trust that is an SGE.

6.10 Schedule 1 to the Bill provides for a maximum civil penalty of up to three times the benefit received or receivable, directly or indirectly, by an individual or its associates in respect of the relevant scheme, where they have breached the promoter penalty laws.

6.11 Schedule 1 also increases the maximum penalty that may be imposed on an individual, where that individual is a partner in a partnership that is an SGE or trustee of a trust that is an SGE, from 25,000 to 50,000 penalty units.

6.12 Civil penalty provisions may engage criminal process rights under Articles 14 of the ICCPR. Although there is a domestic law distinction between criminal and civil penalties, 'criminal' is separately defined in international human rights law. Therefore, when a provision imposes a civil penalty, it is necessary to determine whether or not the penalty amounts to a 'criminal' penalty for the purposes of Article 14 of the ICCPR.

6.13 The civil penalty provisions contained in Schedule 1 to the Bill may be viewed as 'criminal' for the purposes of human rights law. This view may be formed as these provisions are deterrent in nature and proceedings would be instituted by a public authority with statutory powers of enforcement. While this may be the case, the civil penalty provisions do not amend or seek to discourse any rights of an individual or an applicable legal process.

6.14 The amendments allow the Court to penalise an individual because of the breach of promoter penalty laws by another individual. However, this is only possible in circumstances where both individuals are partners in a partnership, or co-trustees.

6.15 This is a necessary component of the amendments to ensure that liability for breaching the promoter penalty laws cannot be avoided by partners or co-trustees who would otherwise benefit from the breach of promoter penalty laws.

6.16 Further, the judiciary retains the power to have regard to certain matters when imposing a penalty on an individual who may only be liable for a penalty due to the breach of the promoter penalty laws by another partner. Specifically, the Court may have regard to the degree of the individual's cooperation with the Commissioner, and whether the individual took any steps to avoid the contravention, when imposing a penalty on an individual.

6.17 The civil penalties imposed by these amendments are appropriate in size. Those involved in contraventions of the promoter penalty laws may receive large financial, and non-financial, benefits from the promotion of tax schemes. The increase in financial penalties is appropriate for regulatory and disciplinary purposes, and to ensure paying a financial penalty does not simply become a cost of doing business.

6.18 Further, the judiciary continues to have discretion to consider the seriousness of the contravention and impose a penalty that is appropriate in the circumstances. The civil courts are experienced in making civil penalty orders at appropriate levels, taking into account a range of factors including the maximum penalty, the nature of the contravening conduct and the amount of the benefit received or receivable. Therefore, a relevant consideration in setting a civil penalty amount is the maximum penalty that should apply in the most egregious instances of non-compliance with the TAA 1953. The maximum civil penalty amounts that can be imposed under Schedule 1 to the Bill are intentionally significant.

6.19 The provisions do not apply to the general public, but to a sector or class of people who should reasonably be aware of their obligations under the law. Specifically, the provisions relate to tax advisers who should have particular regard to their obligations under the TAA 1953. Therefore, increasing these civil penalties will enable an effective disciplinary response to non-compliance.

6.20 The civil penalties do not carry a sanction of imprisonment for non-payment of the penalty and the amendments do not amend any of the criminal process or procedural rights that currently exist and are upheld in accordance with Article 14 of the ICCPR.

Conclusion

6.21 Schedule 1 to the Bill is compatible with human rights because, to the extent that it may limit human rights, those limitations are reasonable, necessary and proportionate.

6.22 To the extent that these amendments limit the rights under Article 14 of the ICCPR, they are compatible with human rights as:

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the increased penalty amounts are aimed at deterring non-compliance with the TAA 1953;

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the maximum penalty amount will only be used in the most egregious instances; and

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the civil penalties imposed are applicable to people who should reasonably be aware of their obligations under the TAA 1953.

Schedule 2 – PwC response - Extending tax whistleblower protections

Overview

6.23 Schedule 2 to the Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

6.24 Schedule 2 amends Part IVD of the TAA 1953 to extend whistleblower protections to eligible whistleblowers who make disclosures to the TPB where they believe the information may assist the TPB to perform its functions or duties under the TAS Act. It also reversed the burden of proof requirements where a whistleblower makes a claim for protection under Part IVD of the TAA 1953.

Human rights implications

Privacy

6.25 Schedule 2 to the Bill engages the right to protection from unlawful or arbitrary interference with privacy under Article 17 of the ICCPR because it provides for whistleblowers to make a number of disclosures of private, sensitive or protected information under the whistleblower regime.

6.26 The right in Article 17 may be subject to permissible limitations, where these limitations are authorised by law and are not arbitrary. In order for an interference with the right to privacy to be permissible, the interference must be authorised by law, be for a reason consistent with the ICCPR and be reasonable in the particular circumstances. The UN Human Rights Committee has interpreted the requirement of 'reasonableness' to imply that any interference with privacy must be proportional to the end sought and be necessary in the circumstances of any given case.

6.27 The amendments allow whistleblowers to disclose confidential information to the TPB and be protected under the whistleblower regime in Part IVD of the TAA 1953. It will improve the TPB's ability to conduct timely compliance activity and better protect the integrity of Australia's tax system.

6.28 The amendment is a reasonable change as it will allow the ATO and the TPB to work more effectively to ensure compliance with taxation laws and the requirements of tax practitioners under the TAS Act.

6.29 Any information that is disclosed to the TPB will remain subject to strict confidentiality protections. The TPB will remain subject to the requirement to take all reasonable measures to protect confidential information from any unauthorised disclosure.

6.30 The amendments also allow prospective whistleblowers to make protected disclosures to medical practitioners, psychologists and a number of entities prescribed by the regulations. Disclosures to these supporting entities allow whistleblowers to get necessary support in the tax whistleblower process.

Reversal of burden of proof

6.31 Schedule 2 to the Bill engages Article 14 of the ICCPR because it reverses the burden of proof requirements for claims of protection by whistleblowers under section 14ZZX of the TAA 1953.

6.32 Section 14ZZX provides a protection to tax whistleblowers in civil or criminal proceedings to not be subject to any civil, criminal or administrative liabilities for having made a disclosure in accordance with Part IVD of the TAA 1953. New part 14ZZXA reverses the evidential burden of proof so that the onus is on the whistleblower to demonstrate that the protection under section 14ZZX appropriately applies to protect them from liability.

6.33 The bill reverses this burden of proof as information about a disclosure (including the circumstance surrounding that disclosure) will be peculiarly within the knowledge of the defendant. For example, several types of disclosures require that the discloser considers that the information may assist either the TPB or the Commissioner in performing their respective functions or duties under the TAS Act or the taxation law. The disclosers consideration of information is knowledge that would be uniquely in their mind. As such, it would also be significantly more difficult and costly for the prosecution to disprove that a disclosure was made in accordance with the whistleblower regime.

6.34 The approach taken in reversing this burden of proof is consistent with the Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers, and also aligns the TAA 1953 with similar protections found in the PID Act.

Conclusion

6.35 The amendments made in Schedule 2 to the Bill are compatible with the rights with which it engages, as they are proportionate and necessary to ensure that Australia's regulators can effectively protect the integrity of the taxation system.

Schedule 3 – PwC response - Tax Practitioners Board reform

Overview

6.36 Schedule 3 to the Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

6.37 Schedule 3 to the Bill amends the TAS Act. The object of the TAS Act is to ensure tax agent services are provided to the public in accordance with appropriate standards of professional and ethical conduct. The TAS Act establishes the TPB which regulates practitioners who provide tax and BAS services in Australia, known as tax agents and BAS agents.

6.38 The TPB manages a public register of tax agents and BAS agents (the Register). The TPB also decides applications for registration and investigates conduct that may have breached the TAS Act, including the Code of Professional Conduct. Where there has been a breach, the TPB may impose sanctions including orders, suspension, or termination of registration. Tax agents and BAS agents who have had their registration terminated for misconduct are listed on the Register. These powers support the object of the TAS Act.

6.39 Schedule 3 to the Bill contains the second tranche of amendments arising from the TPB Review. The amendments aim to restore public confidence in the regulation of the tax profession by improving the Register and enhancing the TPB's investigation powers.

6.40 In particular, the key changes being implemented are:

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An expansion of the ability to include information on the Register about tax agents and BAS agents who have breached the TAS Act and are no longer registered;

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Enabling the TAS Regulations to specify the period of time that information is to remain on the Register, rather than having a 12-month limit for information about tax agents and BAS agents whose registration was terminated for a breach of the TAS Act;

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An increase in the standard timeframe in which the TPB is to conduct investigations into potential breaches of the TAS Act from 6 months to 24 months;

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Enabling the TPB a discretion to include information on the Register about an entity that the TPB has investigated and found to have breached the TAS Act, including where the TPB made a decision to take no further action on or after 1 July 2022 due to the entity being unregistered, with the exercise of this discretion subject to administrative review; and

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Clarifying the circumstances in which the TPB can delegate decisions for which administrative review is available, and enabling broader delegation options where the TPB terminates registration because of death of an individual, a company ceasing to exist, or an entity surrendering their registration by written notice.

Human rights implications

Rights in relation to criminal offences

6.41 Schedule 3 to the Bill engages the right to a fair and public hearing in the determination of a criminal charge against them and the right to be presumed innocent until proven guilty according to the law, under Article 14 of the ICCPR. It also engages the right to not have a heavier penalty imposed than the one that was applicable at the time when a criminal offence was committed, in Article 15 of the ICCPR.

6.42 Schedule 3 to the Bill does not contain any provisions referring to criminal charges or criminal offences. It does not include any civil or pecuniary penalty or possibility of imprisonment. It does include a discretion for the TPB to include certain information on the Register about a current tax agent or BAS agent who has been found by the TPB to have breached the TAS Act. This publication power could potentially be extended by the TAS Regulations to include formerly registered agents and unregistered entities that have provided tax agent or BAS agent services in specified circumstances.

6.43 The publication power applies from commencement. It applies to all new investigations, existing investigations that are not decided at commencement, and investigations where a decision was made between 1 July 2022 and commencement to take no further action as the tax practitioner's registration had ceased at the time of the decision. This ensures that, for a small number of decisions where sanctions were unable to be imposed due to registration ceasing, the TPB can still within a reasonable timeframe publish information about the misconduct. This is necessary and proportionate to close a loophole. Previously, the TPB was not able to take any action or impose any sanction on an individual who breached the TAS Act if the individual allowed their registration to lapse. This provided inequitable outcomes between agents depending on how long remained on their registration at the time that the TPB commenced an investigation.

6.44 The TPB has 6 months from commencement within which to make a decision to publish in cases where a decision was previously made to take no further action. The TPB is required to follow the notification process outlined at subsection 60-125(8). Entities then have the option to pursue merits review with the AAT under subsection 70-10(ha) of the TAS Act.

6.45 The nature and purpose of the power is to support the object of the TAS Act, to ensure tax agent services are provided to the public in accordance with appropriate standards of professional and ethical conduct. The publication power increases transparency of the profession. It helps to protect and empower the public to make informed decisions about tax practitioners. It also assists employers to make decisions about prospective employee tax practitioners. It is also likely to deter agents from engaging in conduct that breaches the TAS Act or the Code.

6.46 The need to uphold the integrity of the tax practitioner profession is at the core of a decision by the TPB to publish information on the Register. Publication is important because it addresses the misconduct in a way that both upholds the integrity of the profession and enables the public to see that the integrity of the profession is being upheld. In the context of recent public scrutiny of misconduct in the tax practitioner profession, the publication power is proportionate and appropriate to supporting the TAS Act's object, including in its application to decisions on or after 1 July 2022.

6.47 Some of the entities covered by the publication power will be partnerships and companies, to which the ICCPR does not apply. Although the publication power includes an aspect of deterrence for individuals, this is restricted to people in a specific regulatory context. It only applies to people who have provided tax agent or BAS agent services, which is a regulated profession, the members of which should reasonably be aware of their obligations under the TAS Act. The publication power does not apply to the broader public.

6.48 The impact of being included on the Register is not sufficiently severe to be considered a criminal penalty for the purposes of human rights law. Having information about a breach included on the Register does not mean that an individual is not allowed to provide tax agent or BAS agent services, if they are still registered. If an individual is not registered and has information about a breach of the TAS Act included on the Register, their lack of registration is the reason that they are not allowed to work as a tax agent or BAS agent, not the fact that information about the breach is published on the Register.

6.49 Being included on the Register is a less severe consequence than sanctions currently available, including suspension and termination of registration. The TPB is already required to include details of an individual who has had their registration terminated due to a breach of the TAS Act on the Register.

6.50 The power complies with the right to a fair hearing before a competent, independent, and impartial tribunal, as contained in Article 14(1) of the ICCPR. Procedural fairness is provided to a tax practitioner who objects to a decision to publish information about the TPB's finding of misconduct. An application may be made to the AAT for review of a decision to publish information about a finding that conduct did not comply with the Professional Code of Conduct or constituted a breach of the TAS Act. Further, the judiciary continues to have discretion to consider the seriousness of the contravention and impose a penalty that is appropriate in the circumstances. The civil courts are experienced in making appropriate civil penalty orders, taking into account a range of factors including the nature of the contravening conduct and the size of the organisation involved.

6.51 Schedule 3 to the Bill does not impede the rights under Articles 14 and 15 of the ICCPR. The power to publish is unlikely to be considered a criminal charge or criminal offence for the purposes of the ICCPR because it is not a criminal offence or pecuniary penalty, and because of the nature and purpose of the power, the fact that it only applies to individuals who work or have worked in a regulated profession, and the relative lack of severity of the consequence. Further, the publication power is proportionate and appropriate to protecting the public interest in supporting the object of the TAS Act.

Right to Work

6.52 Schedule 3 to the Bill engages the right to work under Article 6(1) and right to equal opportunity to promotion in Article 7(c) of the ICESCR.

6.53 The right to work provides that everyone must be able to freely accept or choose their work and includes a right not to be unfairly deprived of work. The right to equal opportunity of promotion is subject to no considerations other than those of seniority and competence.

6.54 Any retrogressive step with respect to the realisation of the right to work must be directed towards a legitimate objective, be rationally connected to (that is, effective to achieve) that objective, and be proportionate. Schedule 3 to the Bill meets these criteria.

6.55 Schedule 3 to the Bill is relevant to the continued employment of individuals, companies or partnerships which are registered tax or BAS agents that breach their obligations under the TAS Act.

6.56 Amendments to section 60-135 of the TAS Act outline that the Register must include information about registered tax practitioners and may also require information on entities that are not registered tax practitioners to be included on the Register. The TAS Regulations will prescribe the specific information that may be published by the TPB and the duration that information will be kept on the Register.

6.57 Further amendments to section 60-125 provide that in addition to powers that already existed to impose sanctions or apply to the Court for civil penalties, the TPB may publish the findings of investigations where there has been a breach of the TAS Act. This option applies to all new investigations, existing investigations that are not decided, and investigations started between 1 July 2022 and commencement where a decision was made to take no further action because the tax practitioner's registration had ceased at the time of the decision. This ensures that, for a small number of decisions where sanctions were unable to be imposed due to registration ceasing, the TPB can still within a reasonable timeframe publish information about the misconduct.

6.58 If an individual is not registered and has information about a breach of the TAS Act included on the Register, their lack of registration is the reason that they are not allowed to work as a tax agent or BAS agent, not the fact that information about the breach is published on the Register. The ability for the TPB to suspend or terminate an individual's registration or reject their application for registration renewal in response to a breach of the TAS Act pre-dates this Bill.

6.59 If an individual is registered and has information about a breach of the TAS Act included on the Register, they are still able to work as a tax agent or BAS agent. Members of the public and employers may be less likely to engage or hire a tax agent or BAS agent who is listed on the Register as having breached the TAS Act or may only do so for a lower fee or salary, but that will come down to the choices of individuals. It is not suggested or required by the Bill, and it would not necessarily deprive the person of continued work in the role of their choosing. Further, if any deprivation of work does result, it is not unfair, as it would be based on the person's ability to provide services that are compliant with the requirements of a regulated profession.

6.60 A registered tax agent or BAS agent who has information about a breach published on the Register may be less likely to receive a promotion from their employer, but that is a matter of employer choice rather than something suggested or required by the Bill. Further, that would not be a lack of equal promotion opportunities, but rather a consequence of an agent's actions and their ability to comply with the requirements of a regulated profession.

6.61 Being included on the Register has less potential impact on the right to work than sanctions currently available, such as suspension and termination of registration. The TPB is already required to include details of an individual who has had their registration terminated due to a breach of the TAS Act on the Register. A decision by the TPB to publish information on the Register is subject to administrative review.

6.62 Any potential limitations on the right to work are reasonable and proportionate as the publication of disqualified entities on the Register is necessary to protect the public from potential dishonesty, misconduct or fraud and maintain high standards in the tax industry.

Right to Privacy

6.63 Schedule 3 to the Bill engages the right to protection from unlawful or arbitrary interference with privacy under Article 17 of the ICCPR because it involves the disclosure of information about entities on the Register, which is publicly available. In particular, the findings of investigations where there has been a breach of the TAS Act may now be published for registered or formerly registered tax and BAS agents.

6.64 The right in Article 17 may be subject to permissible limitations, where these limitations are authorised by law and are not arbitrary. In order for an interference with the right to privacy to be permissible, the interference must be authorised by law, be for a reason consistent with the ICCPR and be reasonable in the particular circumstances. The UN Human Rights Committee has interpreted the requirement of 'reasonableness' to imply that any interference with privacy must be proportional to the end sought and be necessary in the circumstances of any given case.

6.65 The TPB is authorised by the TAS Act to collect and hold information about tax practitioners, including information from the tax practitioner and from third parties. For example, information may be held where a complaint is made about a tax practitioner, where an investigation is conducted about a tax practitioner or during legal proceedings involving the TPB and the tax practitioner.

6.66 The TPB is required to take all reasonable measures to protect confidential information from any unauthorised disclosure. Any information held is subject to strict confidentiality protections under section 70-35 of the TAS Act. The Board is also subject to the APPs under the Privacy Act 1988, which regulate how information is collected, disclosed, and stored.

6.67 Existing legislation already requires details of all currently registered tax agents and BAS agents to be included on the Register. Entities that had their registration terminated other than for a reason prescribed by the TAS Regulations were also included on the Register.

6.68 The TAS Act previously enabled the TAS Regulations to detail further information to be included on the Register. However, limitations in the TAS Act enabled a loophole where an individual could let their registration lapse to avoid having their registration terminated and therefore also avoid being listed on the Register. These amendments enable the TAS Regulations to provide more detail, providing more flexibility to make adjustments should any similar issues arise in the future.

6.69 Under the amendments, after the TPB conducts an investigation and finds that an individual has breached the TAS Act, the TPB can decide to disclose information about the individual on the Register. The scope of this discretionary publication power is therefore limited to members of a regulated profession or individuals who provide tax agent or BAS services, and of that cohort, only the subset of those who have breached the TAS Act as determined by the TPB, and of those, only those that the TPB decides it is appropriate to include on the Register.

6.70 In making a decision to include information on the Register, the TPB is guided by the object of the TAS Act, to ensure tax agent services are provided to the public in accordance with appropriate standards of professional and ethical conduct. This means that the TPB can make a decision to publish to achieve that outcome and protect the public, but not for another purpose such as to punish a tax agent.

6.71 Any information required to go on the Register in relation to a finding of a breach needs to be specified in the TAS Regulations. This circumscribes the TPB's power so that the type of information to be included on the Register will be subject to disallowance and accessible by the entities subject to the power as well as to the general public.

6.72 The amendments provide the TPB with discretion to decide to publish information on the Register, or not. This provides flexibility to treat different cases differently, having regard to the individual merits of each case.

6.73 The TPB's decision to publish information on the Register is subject to administrative review to the AAT, providing independent oversight.

6.74 The TPB is authorised by the TAS Act to collect and hold information about tax practitioners, including information from the tax practitioner or from third parties. For example, information may be held where a complaint is made about a tax practitioner, where an investigation is conducted about a tax practitioner or during legal proceedings involving the TPB and the tax practitioner.

6.75 The TPB is required to take all reasonable measures to protect confidential information from any unauthorised disclosure. Any information held is subject to strict confidentiality protections under section 70-35 of the TAS Act. The Board is also subject to the APPs under the Privacy Act 1988, which regulate how information is collected, disclosed, and stored.

6.76 If there is an error in information included on the Register, the TPB's obligation to maintain the Register would extend to the obligation to correct any error and to ensure that information on the Register is there in accordance with the requirements of the TAS Act and Regulations.

6.77 In the context of recent public scrutiny of misconduct in the tax practitioner profession, the publication power is reasonable, necessary, and proportionate to support the TAS Act's object. It provides a better balance between the rights of individuals providing tax agent services with the public good sought under the object of the TAS Act.

Conclusion

6.78 Schedule 3 to the Bill, in particular the publication power, engages but is compatible with human rights in relation to criminal offences, the right to work and the right to privacy. Taking into account the scope, nature and purpose of the publication power, and its appropriateness to achieve the object of the TAS Act, the fact that it may act as a deterrent to conduct which breaches the TAS Act does not impede rights in relation to criminal offences.

6.79 The right to work is engaged, but the amendments are compatible with it. The publication power itself is unlikely to result in deprivation of work, and to the extent that it does, such deprivation would not be unfair. Any negative impact on promotion would be linked to an individual's competence to meet the requirements of the profession set out in the TAS Act.

6.80 The right to privacy is engaged but is compatible with human rights because the impacts are necessary and proportionate to achieving the object of the TAS Act.

Schedule 4 – PwC response - Information sharing

Overview

6.81 Schedule 4 to the Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

6.82 Schedule 4 amends the TAA 1953 and the TAS Act to allow taxation officers and TPB officials to share official and protected information with Treasury about misconduct arising out of breaches or suspected breaches of confidence by intermediaries engaging with the Commonwealth. The amendments also allow taxation officers and TPB officials to share official and protected information with prescribed professional disciplinary bodies to enable them to perform their disciplinary functions.

Human rights implications

Privacy

6.83 Schedule 4 to the Bill engages the right to protection from unlawful or arbitrary interference with privacy under Article 17 of the ICCPR because it allows for the disclosure of protected information by taxation officers and TPB officials to Treasury and professional disciplinary bodies. Information can also be on-disclosed to the Minister and the Finance Minister in certain circumstances.

6.84 The right in Article 17 may be subject to permissible limitations, where these limitations are authorised by law and are not arbitrary. In order for an interference with the right to privacy to be permissible, the interference must be authorised by law, be for a reason consistent with the ICCPR and be reasonable in the particular circumstances. The UN Human Rights Committee has interpreted the requirement of 'reasonableness' to imply that any interference with privacy must be proportional to the end sought and be necessary in the circumstances of any given case.

6.85 The amendments are appropriate as they ensure that the Government is able to work more collaboratively with regulators and respond to potential serious breaches of confidence in a timely manner. It also enhances the self-regulatory model for the relevant professions by allowing taxation officers and TPB officials to disclose information in relation to potential breaches of conduct.

6.86 The amendments are reasonable and proportionate as they include a number of safeguards to ensure any disclosure does not include information that would disclose the identity of any taxpayer not involved in any wrongdoing represented by an intermediary that is the focus of the disclosure, unless doing so would prevent action being taken against the intermediary. While noting that the disclosure of information to Treasury or to a prescribed professional disciplinary body may include the personal information of both the person involved in any breach of confidence as well as individual taxpayers, these safeguards and the limited circumstances in which this information can be on-disclosed ensures that any potential impact on a person's privacy is limited.

6.87 The amendments are therefore consistent with the right to protection against arbitrary or unlawful interference with privacy under Article 17 of the ICCPR, as they are explicitly specified for in appropriate circumstances.

Criminal offences

6.88 Schedule 4 to the Bill engages the right to be innocent until proven guilty under Article 14 of the ICCPR. Schedule 4 includes a number of exceptions to the general prohibitions on the disclosure of official or protected information in the TAA 1953 and the TAS Act. These exceptions reverse the evidential burden of proof for the defendant.

6.89 Placing an evidential burden in relation to those defences is appropriate, proportionate and reasonable. Principally, this is because in the vast majority of cases the purpose for which the information was disclosed will be peculiarly within the knowledge of the defendant.

6.90 Placing an evidential burden on the defendant is further justified because it would be significantly more difficult for the prosecution to disprove these matters than it would be for the defendant to establish these matters. Additionally, the provisions align with the approach taken with other secrecy provisions in the TAA 1953 and TAS Act.

6.91 Placing an evidentiary burden on the defendant therefore ensures that a secrecy offence is effectively prosecuted. As such, the provision is consistent with the right to a fair trial under Article 14 of the ICCPR.

Conclusion

6.92 The amendments in Schedule 4 are compatible with human rights because to the extent that they may limit human rights or freedoms, those limitations are reasonable, necessary and proportionate.

Schedule 5 – Petroleum resource rent tax deductions cap

Overview

6.93 Schedule 5 to the Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

6.94 Schedule 5 to the Bill amends the PRRTA Act to effectively cap the availability of deductible expenditure incurred by a person in relation to a petroleum project for a year of tax. The changes will mean the offshore LNG industry pays more tax sooner.

6.95 A person to whom the deductions cap applies will be taken to have a taxable profit of 10 per cent of their assessable receipts derived in relation to the project and the year of tax, with PRRT being payable on this amount of deemed taxable profit. That person will be taken to incur augmented denied deductible expenditure in the next financial year.

6.96 The amendments operate by deeming a taxable profit for a person that otherwise would not have been PRRT payable and create a new category of deductible expenditure, being augmented denied deductible expenditure. The amendments also allow for the payment in instalments of a person's deductions cap liability.

Human rights implications

6.97 Schedule 5 does not engage any of the applicable rights or freedoms.

Conclusion

6.98 Schedule 5 is compatible with human rights as it does not engage any human rights issues.